Keepin' it simple: Numbers and lines on the Nasdaq 100 index chart

Though we focus so much on the S&P 500 chart, we should also keep track of what's happening with the Nasdaq including the much-traded Nasdaq 100 (ETF for that being the popular QQQQ's). Here are a few numbers and lines to watch on the Nasdaq 100 index chart ($NDX), using my daily candlestick bars (at right). Obviously the potential resistance at the 200-day moving average (at 1398.70 on Friday) must be watched. Some might be thinking it's showing a reverse H&S or "W" bottom formation, but I'm not convinced it's showing the classic reverse H&S signs including volumes. McClellan Oscillator, Summation Index and ratio data for the Nasdaq market (which I posted at my UBTNB3 blogspot, see links at right) show breadth has been flagging, a bearish divergence. That oscillator would have to spike up soon in order to support a substantially higher move on this rally. Bulls may be hoping for a reverse H&S target such as approximately 1532 or 1553, but I'm a bit skeptical this index is able to push that high at this point.

The NDX already did test a significant Fibonacci retrace level at 1374.25, just on Friday. A close under Friday's low from which this index fails to rally can signify either the much-awaited "pullback" or something more. But if the NDX can continue above that level, it could be an early signal that it will be able to get above the 200-day moving average also. You can see other potential target levels at about 1388 and 1409 (one above, and the other below the 200-day MA).

A lot of people are looking for a pullback, mainly so they can get a good entry on a rally that frankly, many have missed. This means there are two potential ways the market could trip people up: one, by not providing a noticeable pullback for these investors to feel comfortable hopping aboard. Second, by having a pullback materialize, that then deteriorates into something worse. Moving above Friday's high, and certainly moving above the 200-day MA and the 1410 levels, can be signals for higher levels, in case of the first situation where there isn't a huge pullback. For the second situation, if a big pullback does show up, we can look at the recent swing low points for potential support, along with Fibonacci retrace levels and the technical indicators for pullback support levels.

*Update, P.S. (That Wikinvest tool can be interesting - saw they displayed this among related links, Daily Nasdaq 100 (All Allan, 4/23/09) - an interesting take that's bearish but cannot be ruled out simply on that basis.)